Netflix Proposes Expanded Content Supply to Korean Broadcasters Amid OTT Merger Talks

Netflix, the leading OTT platform in South Korea, is making waves by extending a new offer to the country’s three major terrestrial broadcasters. This strategic move aims to secure a larger share of the broadcasters’ content, which has been exclusively supplied to the domestic OTT service Wavve.

[related news]Netflix Shakes Up Korean OTT Market Amid Tving-Wavve Merger Delays

Key Developments:

1. Netflix’s New Proposal: According to MTN News, Netflix has recently approached the major broadcasters with improved terms for content acquisition. This comes as Wavve’s exclusive content supply contract with the broadcasters is set to expire next month.
2. Shifting Content Dynamics: Previously, Netflix had limited access to Korean broadcasters’ content, with most popular shows being supplied to Wavve. The new proposal could see Netflix’s share of new content increase from 2-3 out of 10 shows to 5-6 or more.
3. Broader Negotiations: Netflix is also in talks with content producer SLL Central, offering more favorable terms for content acquisition.
4. Market Pressures: An OTT industry insider noted, “Content providers must consider revenue while also protecting the value of their stakes in Wavve and Tving. Refusing Netflix’s proposal, given its financial power and market influence, won’t be easy.”
5. Changing Landscape: Netflix’s user base in Korea recently dipped from 11 million to just over 10 million monthly users. Conversely, the combined user base of Tving and Wavve has surpassed Netflix, driven by successful original dramas and exclusive baseball broadcasts.

Impact on Tving-Wavve Merger:

Netflix’s aggressive move is reportedly affecting the ongoing Tving-Wavve merger discussions. Disagreements have emerged between Wavve’s major shareholders (the terrestrial broadcasters) and Tving’s key stakeholders (SLL Central and CJ ENM) regarding content supply to the merged entity.

A pay-TV industry source commented, “There’s friction over whether to maintain exclusive content supply to the merged company or expand external content distribution for additional revenue. This is expected to significantly complicate the merger negotiations.”

As the Korean OTT market continues to evolve, the outcome of these negotiations could reshape the competitive landscape and content distribution strategies in the coming months.

Source: MTN News